8 Effective Small Business Employee Handbook Tips

A good employee handbook isn’t just another document your employees have to sign on their first day: this guide helps employees set their expectations from the start and supports a strong team environment at work. While this guide is designed to help you learn more about employee handbooks, it is by no means comprehensive and you should always consult HR compliance and legal professionals when managing the HR function and related matters at your company

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What’s an employee handbook?

An employee handbook, or manual, is an important document your employees will have access to during their time at your company. It’s a resource of record for team members to learn about their employer and all the policies in place protecting them and the company as a whole. It’s all about creating a great culture where everyone’s on the same page so that work is smooth, productive, and fun. Not only will you inform your employees of the standards you hold them to, but you can lay out what they can expect of you, as their employer, too.

Why you should have an employee handbook

Creating a strong, thorough, and informative employee handbook can help you set the stage for new employees just joining your team. Not only that, but as they continue to grow at your company, they can refer back to this source of truth to find all the answers to their questions.

Here’s what a solid employee handbook can help with:

  • Documenting key employment policies
  • Simplifying onboarding processes for new hires
  • Managing litigation risk
  • Establishing clear expectations
  • Informing employees of rights and benefits
  • Managing potential conflicts and disputes in the workplace

You should create one as soon as you’re ready to hire your first employee. Not only will you be protecting your business, but you’ll empower your employees to seek out relevant information and ask questions about the details involved in their daily job responsibilities and their overall growth within the company.

1. Company culture, values, vision, mission statement

Handbooks can help you set expectations for your employees, starting right when they come through the door. This is where you should summarize the basics of your company culture, including the mission, vision, and values. For a new employee, the handbook can help them better understand the company they’re joining. Take advantage of this resource to present your company and team accurately.

Right off the bat, include a welcome letter from your company’s leadership, provide a brief history and a mission statement, and write an overview of your central values. Then, list general details like contact info, office directions, and the existing team structure. The more useful this document is, the more often your employees will refer to it.

2. Confidentiality, nondisclosure, and other statements

Next come the key employment clauses, statements, and agreements. Common items include:

  • Equal employment opportunity statement
  • At-will employment clause
  • Conflict of interest statement
  • Confidentiality and nondisclosure agreement
  • Noncompete agreement

This section can help you protect your business and your employees, even after the relationship is terminated. You can decide which policies make the most sense for you but use these as a jumping-off point.

3. HR and legal information

As your business grows and welcomes new employees on board, actively managing compliance with legal regulations, including the prevention of potential lawsuits for situations like wrongful termination, becomes increasingly important. Depending on where you’re located, you might even be required to have certain policies in writing. For example, California laws require employers to have written guidelines surrounding workplace harassment and internal reporting processes.

Here are some policies that might be worth adding to your employee handbook:

  • Harassment and discrimination policies
  • Privacy policies
  • Safety procedures
  • Codes of conduct
  • Occupational Safety and Health Administration (OSHA) policies
  • Intellectual property rights information
  • Dress codes

It’s best to check with a lawyer before sharing your handbook with employees. Getting it right matters: managing compliance with federal and state regulations and with local laws too, which means your business will be better prepared to face complicated legal action in the future.

4. Compensation and benefits

It’s no surprise that employees will want to know the full breakdown when it comes to their salary and benefits. Here’s where you can help employees learn more about these topics, including your company’s chosen payroll schedule, the complete benefits package, and any additional perks you offer like commuter benefits, 401(k) or other retirement plans, and even company-sponsored lunches. Other information your employees should know includes your process for performance reviews and how it relates to bonuses, promotions, and transfers, as well as your travel and expense policy.

Benefits don’t have to be purely transactional—they can also translate to specialized professional development programs, flexible remote work policies, and regular team-building activities.

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5. Vacation time and sick days

Every employee should be aware of the amount of paid vacation time available to them. Outline not only those policies, but also details on family and medical leave, floating holidays, and company-wide days off. What about situations like jury duty, voting, and other activities that fall within regular work hours? Even before questions like these arise, it can help to make sure they’re addressed in the employee handbook.

6. Work hours

When should your employees expect to come in and head home every day? What are the minimum hours per day that are required? How long are their lunch and break periods? Are there any timesheets or logs they should fill out to report their hours? This information, like your company’s payroll tools and processes, should be readily available in your handbook, especially if your team is compensated hourly.

7. Offboarding

It can be helpful to address what your process is for an employee leaving their position at your company, no matter the circumstances. Instead of guessing your policies, team members who are moving on can understand how to hand off their responsibilities and be aware of the benefits available to them. Some offboarding basics to include are:

  • Final paycheck schedule
  • Exit interviews
  • Consolidated Omnibus Budget Reconciliation Act (COBRA) benefits

8. Signature

Have your employees sign your handbook to ensure that they’ve reviewed all of your policies and are comfortable with them before they begin their job, on an annual basis and when you release any update to the handbook. Keep records of these signatures. Not only is this another way to protect your business from potential legal consequences, this can also show your employees that you value their feedback and encourage any questions.

Potential employee handbook concerns

Potential issues you could face regarding your employee handbook can involve some form of misinterpretation. To help mitigate this risk, make sure you follow a thorough review process for your employee handbook.

Have an employment lawyer read through it and offer recommendations on the specific wording that can help you communicate as clearly as possible. An experienced editor can help you reduce potentially confusing language and transform your employee handbook into a a more easily accessible source of knowledge and not just a jargon-filled, legal document. After those rounds of review, proofread your own writing – you don’t want to republish the entire document that all your employees have already agreed to and signed after noticing a glaring typo.

Once you’re absolutely ready to publish and distribute the manual, make sure to keep a close record on each version. Save the key information, like the date of publication and the specific changes or revisions you made. That way, if any inquiries are made, you can prove that you had X policy or Y statement at the time in question.

In conclusion

Once you have the basics down, you have the option to get creative with the format of your employee handbook. The more engaging it is, the more likely it is that your employees will stay focused and enjoy the process of learning the ins and outs of your business.

At the same time, don’t get caught up in the fonts, images, and layouts you might have seen in popular templates. Your employee handbook doesn’t need to have all the bells and whistles as long as it clearly conveys who you are. Your employees should feel comfortable referring to it throughout their time in their positions, and to use it to ask questions and make recommendations based on their own unique experiences. If you know your mission, you should be able to communicate it fairly easily to your employees. Fostering a great work environment takes continual work but it’s worth it when everyone’s invested in your business’s growth.

As your small business continues to grow, your role as an employer will change with it. Don’t hesitate to take on new responsibilities  and learn new skills—it’ll help you build a more cohesive, dedicated team. For more recommendations and advice, head to the SmartBiz Resource Center today. Search for “Employee Management” to find related articles that can help you succeed as a small business owner.

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